The Insurance Laws (Amendment) Act was passed by the Rajya Sabha late yesterday evening, thus raising the FDI cap in the sector from 26% to 49%. Business Standard brings to you some big industry voices on the passage of the landmark legislation:
Sandeep Bakhshi, MD & CEO, ICICI Prudential Life Insurance
The passage of the Insurance Bill is a welcome development at many levels. It indicates the intent of the government to push the economic revival agenda forward. As the Indian insurance industry expands there will be a need for additional capital in-order to build this scale. The increased FDI limit will provide the much needed flexibility to raise this capital. Customers too will benefit as it will translate into delivery of better products and services to them.
Amitabh Chaudhry, MD & CEO, HDFC Life
This is a landmark event for the insurance industry. The bill is expected to provide a major fillip to growth of the sector. We expect the passage of the bill to lead to a progressive regulatory framework and also provide much needed capital for infrastructure development.
Arundhati Bhattacharya, Chairman, State Bank of India
With financial inclusion proceedings in full force, the timing of increase in limit for FDI in insurance sector could be a game changer. In our estimate, the FDI limit hike in insurance could result in immediate inflow of around Rs. 20,000 crore. Furthermore, FDI hike in insurance is dejure increase in FDI limits for pension sector also as so much of retirement products come from this sector.
Rajesh Sud, CEO & Managing Director, Max Life Insurance
The approval of Insurance Laws (Amendment) Bill, 2014 is a welcome step because it ends the uncertainty. This shows the Government’s resolve to take forward its reform agenda. The Bill approves increase in foreign capital cap to 49%, which will allow the much required flow of long-term capital to the sector and the flexibility of different capital structures depending on each company's requirements. With the availability of additional capital, the industry will be in a position to expand its distribution reach.
In a rapidly evolving sector, the Bill, by mandating the IRDAI to prescribe regulations on a number of insurance related subjects has equipped the Regulator to make course correction without having to wait for legislative amendments. We are hopeful that in order to nurture the industry and get it up for a growth trajectory, the IRDAI would follow a phased regulatory agenda allowing for stability and growth, deepening access and eventually strengthening industry structure.
Ajay Bimbhet, MD, Royal Sundaram Alliance Insurance
This passing of insurance bill is a historic move for the Indian insurance industry. Universal health being one of the primary motives of the new government, we can expect a sizeable FDI inflow into the Indian insurance industry. The investments would be channeled towards product innovations and to increase market penetration. With better economic conditions now, we can expect a double-digit growth for the entire industry. We remain optimistic on the development.
Sandeep Patel, MD and CEO of Cigna TTK Health Insurance
“The Insurance Amendment Bill will further support the development and enhancement of the health insurance industry with an infusion of capital and the ability to operate as a separate line of business. The investments and separate business classification will promote customer-centric product and service innovations with an enhancement to technology, deepening market penetration besides improving distribution efficiencies. A paradigm shift moment for the Indian insurance sector.
Deepak Mittal, MD & CEO, Edelweiss Tokio Life Insurance
With this move some kind of political consensus has emerged and we see this as an important event in kick starting the reform process again. From an international investor community point of view this was a long awaited move and therefore will help in regaining their trust in the Indian economy and polity.
For the insurance industry the passing of the bill will help in putting in place a more progressive regulatory framework. The FDI/FPI limit increase will lead to capital inflows which could be used to expand distribution and to invest technology and service infrastructure.
Shachindra Nath, Group CEO - Religare Enterprises
The Parliament’s nod to the Insurance bill has finally ushered in a long pending reform and paved the way to hike FDI in insurance to 49%. This will surely send a positive signal to global insurance players in particular and foreign investors in general. A number of foreign partners have been eagerly waiting to raise their stake in domestic insurance ventures and Parliament’s approval today will facilitate this much needed investment flow.
Anuraag Sunder, managing consultant, Financial Services, PwC India
This Act holds enough and more potential to jumpstart the sector on a long sustainable basis. There would be all round impact across new players, deeper capital, top line growth, focus on technicals. Value unfolding may also take place through IPOs, consolidation and other possible routes.
Shashwat Sharma, Partner – Management Consulting, KPMG in India
With the Insurance Laws (Amendment) Bill, 2015 being cleared by Parliament investment of around 200 bln rupees is likely to come into the Indian insurance sector over next few years. There is a lot of interest among foreign insurance companies to enter the market here as it has a lot of potential of growth. With more foreign investment and expertise, new products are also likely to be launched. The Insurance Bill also paves way for reinsurance companies to enter the market by opening branches. Earlier they were allowed to operate only through a JV with 26% cap on FDI, but now the new Bill will help reinsurance business evolve as more experienced reinsurance companies come as a foreign branches.
Dr. Arbind Prasad, Director General, FICCI
The passage of Insurance Amendment Bill in Rajya Sabha marks a new beginning for the Indian insurance sector. A much awaited legislation will pave way for higher investments and more innovation in the insurance domain in India. Particularly given long term funding needs of infrastructure in the country, growth of this sector will also help bring much needed funds for meeting India's growth aspirations.
